What’s Left for Sam to Say?

You’ve already heard the news. Sam Bankman-Fried is going to testify in his own criminal trial. Probably later today.

But what’s he going to say?

I really have no idea. No, seriously, I don’t.

He’s said so much (or is it so little?) already. In the month between FTX’s collapse and his arrest in the Bahamas, Sam spun a story for the cameras of the world. In his telling, the crypto exchange’s early November meltdown wasn’t because it had illegally loaned a bajillion dollars of customer deposits to his hedge fund, Alameda. Or maybe it was. But if it was, he sorta didn’t know about it.

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Here’s generally what he said: In 2022 the crypto market imploded. Alameda took a hit. It definitely had some FTX customer money (a bunch of which it was allowed to have) and then a whole bunch of money definitely went poof. Who’s to say who knew what? Not him. Not really.

“I was vaguely aware,” Sam Bankman-Fried said during his halting Dec. 1, 2022 interview with George Stephanopoulos, portions of which have been played during the trial. Few familiar with the crypto industry believed him. I doubt anyone else did, either.

Nevertheless, two factors were going for Sam at the time: 1. He was operating in a low-information environment, and 2. He wasn’t under oath. Both factors are now invalidated and reversed: they work against him as he takes the stand. Let’s start with the first.

When Sam gave that broadcast interview – his best, first chance to tell his tale to as many normal people as possible – he assumed a unique position of authority as to FTX and its downfall. Sure, there were press reports that hinted at nefarious deals, like Caroline’s alleged tell-all to employees of Alameda, but those were all hearsay. Against that: Sam’s heady opportunity to be a first-person narrator. Caroline wasn’t saying her side directly to the public. HE could, so he did.

The story he gave to GMA was not convincing. His long pauses bled into hardly artful dodges of difficult questions. Sam admitted he felt absolutely terrible that “a lot of people got hurt” by the company’s implosion and he wished he took “like, a lot more responsibility for understanding what the details were, what was going on” at Alameda, rather than leave it to others, like, uhhh, the lawyers.

What Sam could not provide in answers he tried to make up for with solutions. Weeks after resigning from the bankrupt FTX he told GMA’s audience that he was “trying to focus on what I could do going forward to be helpful” for his failed company. (For what it’s worth, FTX’s new CEO “Enron John” Ray III wanted nothing to do with Sam and ignored his emails and texts).

Stephanopoulos pushed and pushed Sam on whether he knew about Alameda robbing FTX’s piggy bank, as the press alleged Caroline had said he did. Refusing to take Sam’s dodging, the interviewer conjured up a prescient scenario. I’ll transcribe it here.

Stephanopoulos: If she’s in court and you’re in court and she’s under oath, and you’re under oath (Sam: “yep”), and you’re asked, did you know that these funds were being funneled to Alameda, what is your answer?”

Sam: “I did not know that there was any improper, uhh, use of customer funds.”

Over the last three weeks at trial we’ve heard Caroline and a whole bunch of other FTX insiders testify (under oath) that Sam knew about the secret loan arrangement. Not only that he knew, but that he ordered code to be written that allowed it to happen. Not only that he orchestrated it, but that he hid it from his lawyers. That he ignored their pleas to shut off the customer fund valve. That he spent their money on his business, on other businesses, on loan payments, on sponsorships, on apartments and island houses.

In the spirit of Stephanopoulos’ question we’ll focus on what Caroline said under oath on Oct. 11.

Caroline: “He Sam was the one who set up the systems that allowed Alameda to take the money, and he was the one who directed us to take customer money to repay our loans.”

So, what’s Sam gonna say under oath? I really have no idea.

What we’re expecting

Here’s the game plan for today:

The Department of Justice has one last witness, FBI Agent Mark Troiano. He’ll testify that Bankman-Fried was in about 200 different group chats which had auto-delete enabled. The DOJ thinks direct examination will take maybe 30 minutes, and the defense thinks 10 minutes max.

Once that’s done, a little past 10:00 a.m. ET, the defense starts its turn, and plans to call Krystal Rolle, a Bahamas attorney who represented Bankman-Fried and was present at a meeting with the country’s securities regulator that former FTX executive Gary Wang testified about. There’s a little bit of controversy here, as the DOJ says it only just heard about Rolle, and the judge has ordered the defense to provide more information.

Defense attorney Mark Cohen thinks Rolle will take maybe 30 minutes on direct examination. Joseph Pimbley, the proposed expert witness, will take maybe 20 minutes max on direct examination and possibly around the same again for cross-examination.

The defense has a third witness who’d point out there were over a dozen lawyers in the various group chats Bankman-Fried was part of, though Cohen said he’s hoping for a stipulation with the DOJ to make that testimony unnecessary. The DOJ’s Nicholas Roos (whose name is pronounced “rose,” by the way) doesn’t think the information is even admissible.

For those of you doing the math, all these witnesses may be done by 11:30 or 12. And that brings us to the man of the hour, Sam Bankman-Fried himself. As Danny noted above, he’s said quite a lot about what he thinks happened with FTX, and the defense clearly wants to continue pushing its position that he didn’t intend to defraud customers or investors and things just kind of spiraled.

For the first time in a while, Bankman-Fried will have an opportunity to do just that.